Pilot program for rural homestead withdrawal is quietly spreading across the country

It is learned from authoritative sources: the pilot work on the rural homestead withdrawal mechanism has been quietly launched, and the pilot will be carried out in rural areas of some county towns across the country where the homestead vacancy rate is no less than 8%.

Unlike previous pilots that were mostly carried out in a few developed provinces, this pilot will be carried out nationwide. In principle, all 33 provinces and cities have quotas for pilot villages, and the determination of village pilots must be jointly reviewed by the Ministry of Land and Resources, the Ministry of Finance, the Ministry of Agriculture, and the central bank.

This “new land reform” is led by the Central Leading Group for Deepening Reform, and top-level institutional designers internally define it as “a macro land reform without experience or precedent.”

The upcoming 2015 Central Document No. 1 also echoes this “new land reform” pilot. Some industry insiders believe that the 2015 Central Document No. 1 will focus on reform of the rural collective property rights system, reform of the rural land system, and modernization of rural agriculture, and that “the marketization of the homestead system is basic preparation for agricultural modernization.”

⟦NL> Before this pilot, the main means of homestead withdrawal was through the linkage between urban and rural construction land increase and decrease (the use right of idle homesteads is withdrawn in a marketized and monetized way, but ownership remains unchanged, and the withdrawn homestead quota is converted into urban construction land quota). The Economic Observer has learned: this pilot will replace the above “increase-decrease linkage” measure.

Previous pilot areas such as Jianxin Village in Gexianshan Town, Chengdu, and Dongli District in Tianjin must submit applications to the Ministry of Land and Resources and obtain authorization before they can obtain qualification for this pilot.

It is understood that the specific path of this pilot is: survey the homestead vacancy rate——farmers voluntarily withdraw from homesteads——compensate farmers with homestead funds (the compensation price is linked to the average local commercial housing price)——withdrawn homesteads become collective operating construction land——collective operating construction land enters the market.

Over a period of 2 and a half years, the pilot will attempt to build innovative mechanisms in the following aspects:

First, allow remaining homesteads to enter the market. Specifically, in pilot areas villagers may keep the nature of their homesteads unchanged for their own use and operation, or the collective economic organization may repurchase the original homesteads and convert them into operating construction land before entering the market in accordance with relevant policies and procedures. In other words, the remaining rural homesteads first undergo a “change of nature” into “collective operating construction land,” and a major highlight of the new land reform is promoting the circulation of collective operating construction land (that is, “rural land entering the market”).

Second, rural land enters the market according to the principle of “stock first, incremental supplement,” and the collective operating construction land entering the market is in principle not arranged within villages, and the increment of collective operating construction land is not strictly limited, which will bring enormous economic vitality to rural areas.

Third, rural collectives list collective operating construction land on the land trading market in accordance with relevant policies and procedures.

It is worth noting that the selection standard for this pilot of the homestead market-entry mechanism is rural areas at the county level, while rural areas in prefecture-level cities (and above), urban villages, and village-edge villages are not within the pilot scope. “If such pilot work were carried out in urban villages and village-edge villages, it would inevitably cause small property rights housing to be legally formalized (public information shows that 70% of small property rights housing is concentrated in urban villages and village-edge villages), so choosing remote areas for the pilot minimizes risk.” an official from the Ministry of Land and Resources told the Economic Observer reporter. The Land Administration Law has always strictly prohibited urban residents from purchasing homesteads in rural areas, and the rights holder of homestead use rights is members within the collective economic organization. According to the explanation by Chen Xiwen, director of the Office of the Central Rural Work Leading Group: it is a legal concept, and the legal concept is the principle of self-ownership and self-use, emphasizing residential attributes rather than market attributes.

However, with economic development, farmers go to cities to work, and a large number of rural homesteads sit idle. A report released in March 2012 by the Institute of Geographic Sciences and Natural Resources Research of the Chinese Academy of Sciences stated that the area of idle village land caused by factors such as abandoned rural homesteads reached more than 100 million mu, accounting for one-eighteenth of the country's total arable land. At present, 15% of China's rural homesteads are idle, and the idle rate of some rural homesteads in Zhejiang Province is even as high as 60%.

Cai Jiming, a deputy to the National People's Congress and director of the Center for Political Economy at Tsinghua University, believes: “China is in the process of industrialization and urbanization, and land has become a scarce resource. Under China's current laws, villagers can neither sell nor transfer collective land, and they lack the independent right to dispose of agricultural land conversion and the bargaining power in the land expropriation process, thereby excluding the possibility of farmers sharing the dividends of industrialization and urbanization. Therefore, homesteads and agricultural land must be allowed to enter the market in parallel; otherwise, farmers will always remain farmers.